Asia stocks dip on fresh European worries; Nikkei down 0.82%

Investing.com

Dec. 18, 2011, 9:49 PM

Forexpros - Asian stock markets slipped Monday on fears that the European debt crisis will rattle nerves anew in wake of a Fitch Ratings call to threaten France and other European nations with downgrades. During early Asian trading, Hong Kong's Hang Seng Index was down 1.76%, Australia's S&P/ASX200 was down 2.11%, while Japan's Nikkei 225 Index was off 0.82%. While the world applauded European pledges to integrate fiscal policies at a Dec. 9 summit, the optimism was short-lived. On Friday, Fitch Ratings said it revised France's rating outlook and put six other euro zone members on review for downgrades on grounds that a "comprehensive solution" to the crisis is "technically and politically beyond reach." Furthermore, European Central Bank President Mario Draghi told the Financial Times over the weekend he was sticking with his opposition to intervening in the bond markets and buying up sovereign debt in order to ease the crisis. Such a move, known as quantitative easing, could pressure inflation rates upward and violate the central bank's mandate to ensure price stability. "The important thing is to restore the trust of the people - citizens as well as investors - in our continent. We won't achieve that by destroying the credibility of the ECB. This is really, in a sense, the undertone of all our conversation today," Draghi said. Quantitative easing tends to flood markets with liquidity, often pumping up stock prices in the process. Hong Kong's leading losers included Esprit Holdings, down 5.10%, COSCO Pacific, down 4.73% and Li & Fung, down 3.60%. In Australia, top losers included Billabong, down 40.38% on earnings warnings, One Steel, down 9.80% and Karoon Gas Australia, down 7.11%. European stock futures were down as the market digested the Fitch Ratings statements as well as Draghi's weekend comments. During Asian trade, France 's CAC 40 futures were down 0.33%, while Germany 's DAX 30 futures were down 0.34%. Meanwhile, in the U.K. FTSE 100 futures were off 0.33%. Dow Jones Industrial Average futures were down 0.31% while the broader S&P 500 futures were down 0.29%. Later Monday, Japan's Ministry of Economy, Trade and Industry will release its latest All Industries Activity Index, which measures the monthly change in overall production by all sectors of the Japanese economy. The index closely follows Japanese gross domestic product and growth figures. Draghi is expected to speak in public again, and any comments suggesting more relaxed or more eager opposition to quantitative easing will reflect in stock markets worlwide. Forexpros - Forexpros offers an extensive set of professional tools for the Forex, Commodities, Futures and the Stock Market including real-time data streaming, a comprehensive economic calendar, as well as financial news and technical & fundamental analysis by in-house experts.